According to a report in the Australian media, financial services firm AMP is nearing completion of another reinsurance transaction to free up capital, with China Life, Munich Re and Hannover Re all named as potential parties to the deal.
The Australian Financial Review (AFR) reports that AMP may be following on from a life reinsurance deal that helped the firm release up to $500 million of capital from its AMP Life business.
That deal was a quota share agreement with Munich Re, which saw the German reinsurer taking on 50% of $750 million of annual premium income from the AMP Life retail portfolio, beginning 1st November 2016.
AMP called this reinsurance arrangement “significant” and so it’s not surprising to read that a follow-up may be near to completion.
The AFR said that AMP is believed to be in “live negotiations” to offload another chunk of its life insurance business to reinsurers.
This time around China Life, which is a joint venture partner to AMP, is said to be involved, alongside Munich Re, Hannover Re and others as yet unnamed.
China Life has a strategic partnership with AMP, so it would make sense for some of the premiums to be ceded to the re/insurer as a way to maximise efficiency.
AMP has been managing its legacy life book for a number of years now, as a deteriorating picture meant that there were repeated calls for it to enhance its capital strength.
Reinsurance of the book is one way that can be achieved.
